I WAS speaking to a grain trading mate of mine this morning and he reckons every cattle lotfeeder he knows is in the process of expanding capacity, and that opportunity feedlots are springing up everywhere – with water availability the biggest constraint (and complaining neighbours).

I can see the same thing happening across the lamb feeding sector, driven by the outlook for meat prices and prospects for competitive grain prices.

Southern producers are getting better at containment feeding and managing lambs on feed, with the quality of lambs a testament to this over the past 18 months. Very few saleyards yardings have not featured solid runs of well finished heavy grainfed lambs.

For those who don’t follow the grain market religiously, the world is in the process of harvesting a record grain crop, spurred on by a 5pc lift in US corn plantings and the best conditions across the US corn belt since 2018.

South America is just wrapping-up a record harvest while crops across Europe have navigated a hot spell and production forecasts are rising. Even Australia looks to have dodged a bullet with the crop improving after a tough start across the south. Consistent rain will be needed across the north to maintain yield potential on bulky crops.

Rather than offload grain at below $300/t ex farm (not much above cost of production) many will see the value in converting this grain to meat given the favourable outlook for meat values moving forward.

Source: CGX

This chart shows the price of grain in $/tonne delivered Downs feedlots.

Elders agents report that feedlot buying has stepped up at notch to 400-405c/kg liveweight delivered Downs for flatback crossbreds, with non-HGP treated cattle the most in demand.

Straight Angus feeders are pulling near 500c/kg lw in some regions.

There was a run of 100-day grainfed heifers 600kg sold at Dalby last week no HGP that sold to a top of $4.11/kg lw, with those heifers out-selling the bullock run on a c/kg lw basis – something you don’t see too often.

Heavy cows took another step forward, up around 15-20c/kg lw to 344-348c/kg lw with southern operators again pushing the job along.

Winter impact

The winter is starting to affect feed quality across QLD and northern NSW and has slowed down the market for the little backgrounder type cattle, with a few opportunities presenting themselves. There is a weather system in the forecast (that looks a little weird and could be changeable) that is projected to deliver some more rain to these areas and keep things going for a bit and maybe encourage some to take a punt, because it is starting to dry out a bit across nth NSW and southern QLD.

The big unknown in the market is whether Trump is going to impose an additional 50pc tariff on Brazilian beef imports. Apparently, he is not vey happy about Brazilian domestic politics.

The imposition of this tariff would effectively shut Brazilian beef out of the US market and leave Australia as the only volume supplier of imported lean beef. It would of course push more Brazilian beef into other secondary markets but apart from China where Australian beef competes in different segments, Brazilian beef does not yet have access to north Asian markets. Less Brazilian beef imports into the US may also draw US beef out of exports markets.

Aside from Brazil there is a lot to play out on the tariff front over the next few weeks which could see the return of some volatility in outside financial and currency markets.

Richard Koch, Elders

Author Richard Koch is Elders’ business intelligence analyst. He discusses local market conditions and trends with senior Elders managers from across Australia each Monday morning.